All men’s miseries derive from not being able to sit in a quiet room alone. – Blaise Pascal

Posted by: donmihaihai | April 13, 2008

Stock Challenge : Getting the market bottom right!

There is no stock challenge here, in my blog, especially one on trying to get the current market bottom right. I am not too concern about when the market hit its bottom too because I know that I am not good at playing this contest. Stock investment is about buying cheap and selling dear and does not require buying at the bottom of the bottom or selling at the top of the peak because one should be doing OK as long as it is not buying dear and selling cheap.

While reading William C. Nygren of Oakmark commentary, I come across another typically writing on market bottom by John Train

“At a major bottom, current business news is usually terrible and many authorities feel that things are likely to get even worse. There are several spectacular bankruptcies, of international importance. Unemployment is usually up. There is usually some grave unresolved national problem that is bothering everybody. The brokerage business itself is likely to be in the dumps, with many bankruptcies. Big “producers” of the up years have to cut back on their lifestyles. Wall Street’s own desperation reinforces the syndrome. When in a market collapse everything finally caves in during a few catastrophic days and weeks, there is an almost audible flushing effect. Stocks are hurled into the abyss, like the cargo of a sinking ship that the crew is desperately trying to save. Value means nothing.”

My little brain is telling me that the current situation look exactly like what was being written so it must be a bottom. But wait, isn’t there are more bad news coming out, the DJ still haven’t break(or already did?) a decline of 20% and a recession is coming, hitting hard this time around? Seriously I can’t figure it out or willing to spend time trying to do it because the chances of getting it right are very low. Not just about the probability of getting it right, the amount of time and effort to read the market price, news, employment data, GDP growth, inflation, fed statement and even commentaries everyday is crazy. To me it is not worth doing it at all.

But it does not prevent many market participants, trying to do the impossible or at least with an opinion of their own on whether when/did the market bottom, current rally is a sucker rally, recession is coming and how bad, earnings is going to fall big time, etc etc. I usually say, in a rude way(I am not nice anyway) that they have an opinion for everything knowledge of none. After a while, it is almost like a contest, even up to a point where I am right you are wrong kind of thing.

Hey, those times can be of better use let say more personal times, more time to dig companies or even reading a book or write some bullshit in a blog. And ya, if one could not almost precisely predict the market peak in 2007 then what are the chances of doing it right at the opp?